Exam (elaborations)
ICAEW – FAR exam | Questions with 100% Correct Answers |Verified
- Course
- Institution
ICAEW – FAR exam | Questions with 100% Correct Answers |Verified
[Show more]
Content preview
ICAEW – FAR exam | Questions with 100% CorrectAnswers |Verified
What is the accounting treatment for a downwards reval where the asset HAS previously been
revalued upwards? - ✔✔CR carrying amount of asset (to reduce to FV).
DR revaluation surplus (to extent reval relates to that asset).
DR PL expense with any remaining amount unable to be taken to reval surplus.
Name 4 external indicators of impairment as outline by IAS 36. - ✔✔- decline in market value
of asset.
- adverse changes in operational environment.
- increases in interest rate (lower PV of future cash flows).
- value of entity as a whole is lower that its net asset value.
Name 3 internal indicators of impairment as outlined by IAS 36. - ✔✔- asset is obsolete or
damaged.
- change in entity have occurred meaning previously expected benefits will not occur.
- evidence suggesting asset will not perform as expected.
,How is impairment loss calculated and what is the 'recoverable amount'? - ✔✔Impairment
loss = CA - recoverable amount.
Recoverable amount = greater of:
FV less costs to sell.
OR
Value in use (PV of future cash flows expected from asset).
How should an impairment loss be recognised? - ✔✔DR PL expense.
CR CA of asset.
What 6 things does IAS 16 require in a PPE disclosure note? - ✔✔1. the measurement basis
used for each class of PPE (cost or reval).
2. depreciation methods used.
3. useful lives/depr rates used.
4. changes in accounting estimates.
5. details of any revals including CA under cost model of revalued assets and movement on the
reval surplus.
6. a PPE rec showing opening balances, any changes in the year and closing balances for each
category of PPE.
,What (4) requirements does IAS 5 provide for an asset to classify as 'held for sale'? -
✔✔Asset must be:
1. available for immediate sale in present condition.
2. sale must be highly probable (committed plan for sale, active program to locate buyer, asset
being actively marketed).
3. sale expected to be completed within 12 months of being recognised as HFS.
4. unlikely that the plan will be changed significantly or withdrawn.
**for assets valued using reval model, prior to classifying as held for sale should be revalued
resulting in immediate recognition of costs to sell as impairment loss.
What three things does IAS 36 Impairment of Assets require disclosure of? - ✔✔1. amount of
impairment loss charged to PL for period and which line it is included.
2. amount of impairment loss on revalued assets recognised as reduction in reval surp.
3. disclosure of nature and amount of each material impairment loss.
What ethical issues arise over the recognition of PPE? - ✔✔- may be pressure on
accountants to overstate PPE or incorrectly capitalise costs to inflate profit.
- must demonstrate ICAEW principles of objectivity and professional competence and due care.
What is a financial instrument according to IAS 32? - ✔✔'any contract that gives rise to a
financial asset of one entity and a financial liability or equity instrument of another entity.'
What is a financial asset? - ✔✔Any asset that is:
1. cash
, 2. an equity instrument (shares) of another entity.
3. a contractual right to:
- receive cash or another financial asset from another entity.
- to exchange financial assets or financial liabilities with another entity under conditions that
are potentially favourable to the entity.
What is a financial liability? - ✔✔Any liability that is a contractual obligation:
- to deliver cash or another financial asset to another entity.
- to exchange financial assets or financial liabilities with another entity under conditions that
are potentially unfavourable to the entity.
What is the difference between redeemable, irredeemable with mandatory cumulative
dividends and irredeemable preference shares? - ✔✔Redeemable pref shares = classified as
a liability (treat like a loan), dividends are taken to finance costs.
Irredeemable with mandatory cumulative dividend = treat at liability as above.
Irredeemable = classified as equity and dividends are taken from retained earnings.
What is the IFRS 9 initial treatment of all financial assets and liabilities. - ✔✔ALL financial
assets and liabilities should be initially recognised at their FV (cost) and adjusted for transaction
costs:
- financial asset = add transaction costs.
- financial liabilities = minus transaction costs.
What is the subsequent treatment for financial assets/liabilities according to IFRS 9? - ✔✔-
Cost needs to be amortised:
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Examsplug. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.24. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79223 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now